Japanese generic drug manufacturer Sawai is using the USD 1.05 billion-acquisition of the non-branded pharmaceuticals business of Upsher-Smith Laboratories as a springboard for growth in the US market.

In its first ever overseas investment, the Osaka-headquartered manufacturer is effectively gaining control of an established player without having to build a North American subsidiary from the ground up.

Founded in 1919, Upsher-Smith is a privately-held, Minnesota-based pharmaceutical company owned by the Evenstad family through their vehicle, ACOVA.

The business has a diversified portfolio of over 30 generic drugs - mainly oral solid preparations - and a pipeline of more than 30 additional drugs.

While it has a broad range of medications, it has a particular focus on developing therapies for people living with central nervous system conditions, such as seizures.

The acquisition, which is due by the end of June and envisages Upsher-Smith’s non-generic activities remaining with Acova, is in line with the Japanese government’s plan to tackle aging population issues and the high cost of medicines.

As such in 2015 it set a target of raising the share of non-branded prescriptions to 80.0 per cent of the total pharmaceutical sector volume by the end of 2020.

In order to meet this surge in demand, among other things, Sawai announced in August 2016 it wanted to expand in the US, the world’s largest healthcare market.

The group’s purchase of all the equity interest in the generics business – financed by bank loans and available cash – is one of 15 US-based acquisitions announced or completed by Japanese acquirors so far this year.

Zephyr, the M&A database published by Bureau van Dijk, shows some of the more notable deals include Takeda Pharmaceuticals taking over Ariad for USD 5.20 billion and Softbank making a USD 3.30 billion offer for Fortress Investment.

Furthermore, according to Zephyr, Sawai’s purchase is among the top 50 Japanese outbound acquisitions by value targeting a company in the US on record.